A Cautionary Energy Tale That Cannot Be Ignored

Good intentions should never excuse poor energy policy. 

And nowhere else has this more true than within Europe, where aggressive energy policies have become national disasters. If you’re looking for a clear-cut example of what NOT to do regarding an energy transition away from fossil fuels, look no further than Germany. 

The recent proposals from Volkswagen regarding the closure of two factories in Germany are just the latest signs, too. 

Call it a mix of competition and over-enthusiastic targets. It turns out that Europeans aren’t embracing the switch to EVs as much as their government would like. In Volkswagen’s case, the company’s projections are that sales would be more than half a million vehicles short of their pre-pandemic volume. 

Thing is, VW isn’t expecting those sales to reach pre-2020 levels anytime soon… if ever. 

Apparently the slowdown we saw earlier in EV sales this year wasn’t a fad. 

What this means is that we’re finally starting to see what we’ve known all along — those overly ambitious EV goals laid out by the world’s largest automakers were nothing more than for PR appeasement. 

But Germany has a bigger problem on its hands: Cost. 

German households paid more than 41% more for electricity compared to the average price in the EU during the second half of 2023. 

And that’s going to get a lot worse going forward…

Volkswagen is not alone in dialing back the optimistic targets of an all-electric fleet in the near future. Volvo quietly toned down its plan to be 100% electric vehicles and hybrids by 2030, and is now aiming for at least 90% by the end of this decade. 

It’s the same situation for BMW and Renault, who pushed back against the EU’s emission targets last March. The emission targets include a 25% reduction in a company’s fleet of new passenger cars next year. 

However, there’s another reason why EVs are less desirable in EU countries like Germany, and it all comes down to the same aggressive approach at executing an energy transition away from fossil fuels. 

But to really understand the energy crisis facing Germany today, it’s important to understand how it began.

For that, the trail leads back more than a decade to the “energy turnaround” that began in Germany roughly 14 years ago — the Energiewende. 

Back in 2010, the German government passed an aggressive piece of energy legislation that put the country on the path to its current crisis. 

The intentions were good — phasing out dirty sources of energy for cleaner renewable sources such as wind and solar is a noble endeavor. Unfortunately, other cleaner forms of energy also fell within the government’s crosshairs. 

Less than a year after the energy turnaround began, the Fukushima accident further sullied the nuclear energy image to the public, which in turn led Germany to phase-out nuclear power altogether. By 2023, Germany’s three remaining nuclear plants were taken offline. 

The problem is that despite the massive growth in the share of renewable energy over the past decade, the shortcomings were still there. When natural gas shortages materialized soon after the Russia-Ukrainian war began in 2022, Germany was forced to reopen some of its coal plants to keep the power running. 

Things were worse for the country’s industrial sector, with German manufacturers paying more for electricity than in both China and the United States. 

“What was the result?” you ask. 

Well, let’s just say that the German economy is expected to grow by a whopping 0.2% this year. 

Energy policies matter, folks. 

Now here’s part of this cautionary tale that should really sink in: We’re seeing the same kind of disastrous energy policies occurring right here in the United States today!

We’ll talk about where it’s happening next time.

Until next time,

Keith Kohl

Check us out on YouTube!

A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.

For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.

Keith’s keen trading acumen and investment research also extend all the way into the complex biotech sector, where he and his readers take advantage of the newest and most groundbreaking medical therapies being developed by nearly 1,000 biotech companies. His network includes hundreds of experts, from M.D.s and Ph.D.s to lab scientists grinding out the latest medical technology and treatments. You can join his vast investment community and target the most profitable biotech stocks in Keith’s Topline Trader advisory newsletter.